Metered Access

Crain's Detroit Business is a metered site. Print and digital subscribers have unlimited access to stories, but registered users are limited to eight stories every 30 days. After viewing three metered stories, you'll be asked to register or log in. After eight more stories in 30 days, you'll be asked to subscribe.

Inland Waters fights new award of DWSD contracts to Lanzo

Roseville-based Lanzo Cos. Inc. is heir to $30 million of Detroit sewer lining contracts previously awarded to the now-bankrupt Lakeshore TolTest Corp., but a competitor claims Detroit officials were in no position to make the new award.

Detroit-based Inland Waters Pollution Control Inc. brought a second bid protest this week to the Detroit Water and Sewerage Department, claiming it acted out of turn at a May 28 meeting by awarding two three-year, $15 million contracts to Lanzo. The contracts are for sewer lining and repairs on Detroit’s east and west sides.

Inland is still appealing the original bidder selection process in which DWSD tapped Lakeshore to the Detroit City Council. Inland contends Detroit can take no further action on those contracts while its protest is pending.

“Pulling the award of the contracts to LTC and awarding the contracts to Lanzo does not address or resolve these significant issues raised in Inland’s bid protest with respect to LTC … ,” Inland’s second protest states.

“The bidding, evaluation and award process for the contracts needs to be re-initiated with internal controls in place to prevent further eroding of the integrity of the process.”

The department awarded two $30 million contracts April 23 to Lakeshore TolTest and then assigned those contracts from that company to Lakeshore Global Corp., a separate company formed by former LTC Chairman and CEO Avinash Rachmale.

Inland and Detroit-based Blaze Contracting Inc. protested that decision, but Lakeshore TolTest filed for Chapter 7 bankruptcy liquidation May 2. The DWSD later decided both contracts were void. It denied the protests, but Inland appealed and awaits a hearing before a committee of the City Council on June 16.

The department later lowered its allowance for each contract to $15 million “to accommodate our current financial constraints” and granted new awards to Lanzo, deemed the next-best bidder, on May 28.

Inland notes that the contracts were not on the department Board of Water Commissioners’ agenda that day and Lanzo is not a Detroit-based business. It also contends that the entire bidder review “is seriously flawed,” that one of the board members is committed to seeing that Inland gets no future DWSD business and that the board should have taken no further action until its protest is resolved.

William Wolfson, chief administrative and compliance officer and general counsel for the DWSD, contends the department can re-award its contracts because Inland was protesting the award to Lakeshore, which is now moot.

“Procurement policy states that if a protest is filed, ‘the DWSD Director shall immediately halt the processing of the relevant contract award.’ In this case, Inland protested the award of the contract to Lakeshore TolTest,” Wolfson stated in a response to a query from Inland’s attorney this week. “No further action is being taken with respect to that award.”

But Michael Jacobson, attorney for Inland at Jaffe Raitt Heuer & Weiss PC in Southfield, said the company was protesting the department’s own process, not Lakeshore per se.

“They (LTC) may be the manifestation of sickness, or the symptoms, but the cause of the illness is process,” he said. “The procurement policy makes it clear that until there’s a decision by City Council, there should not be any award on these contracts. To me, it looks like the only course of action is to halt the process.”

Lanzo attorney Peter Cavanaugh of Royal Oak-based Cavanaugh & Quesada PLC said in an email to Crain’s this week that the Board of Water Commissioners conducted “an extensive review of all the bidder’s experience and qualifications … (and) found Lanzo to be the highest qualified bidder.

“The Board’s decision to award these contracts to Lanzo reflects sound public policy and is consistent with best contracting practices.”